New Delhi:  Essar is likely to seek refund of USD 883 million, the amount deducted as withholding tax related to 22 percent stake sale by its Mauritius entities in Vodafone Essar, from the I-T department, a day after Vodafone got relief with regard to Rs 11,000 crore tax demand.

Essar is planning to seek a USD 883 million tax refund from the Income Tax Department. The company is examining the Supreme Court judgement in the Vodafone case and will shortly decide on the course of action to seek this refund, sources close to the development said. The company is expecting to resolve the issue in a few months, they added.

Last year, Essar Communications' (Mauritius) wholly-owned subsidiaries, Essar Communications Ltd and Essar Com Ltd, had entered into an agreement to sell 22 percent shareholding in Vodafone Essar to the Vodafone Group for a net payment of USD 3.32 billion, after deduction of withholding tax of USD 883 million.

The tax was deducted by Vodafone and was submitted to the Indian tax authorities.

When contacted, an Essar spokesperson declined to comment.

Under the agreements signed last year in Mauritius, Vodafone had made a net payment of USD 3.32 billion, after deduction of withholding tax of USS 880 million, the company had said in a statement.

The Supreme Court on Friday set aside the Bombay High Court judgement asking Vodafone International Holdings to pay Rs 11,000 crore to Income Tax department, on the ground that Indian authorities do not have jurisdiction on an overseas transaction.

The court also asked the IT department to return Rs 2,500 crore deposited by Vodafone, in compliance of its interim order, within two months along with 4 percent interest.

(Agencies)